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<br />Abbott Ranch <br />March 21-22, 2006 <br /> <br />Agenda Item 17b <br /> <br />Accordingly, the revised Total Project cost would be: <br /> <br />1. Replacement Well/Appurtenances <br />2. Prior Costs for Existing Well <br />3. Contingency (15%) <br />TOTAL <br /> <br />$ 36,270 <br />12,678 <br />5.440 <br />$ 54,388 <br /> <br />The total estimated cost of the revised project is $54,388. The Ranch qualifies for the Agricultural <br />interest rate, and staff is recommending a maximum loan amount of $48,950 (90% of the estimated <br />project cost) for 10 years at an interest rate of 2.00%. The Ranch will pay the 10% local share <br />($5,438) of the project cost from existing reserves. The Ranch will cover any costs that exceed the <br />estimated project cost. <br /> <br />Table 1 is a summary of the financial aspects of the project. A CWCB Loan of $48,950 would have <br />an annual payment of $5,994 (including the 10% reserve requirement) at the loan terms of 2.00% <br />for 10 years. <br /> <br />Table 1. Financial Summary <br /> <br />Project Cost $54,388 <br />Number of Acres IrriQated 150 <br />CWCB Loan Amount $48,950 <br />CWCB Loan Payment (includes 10% reserve) - Beain 2007 $5,994 <br />Annual Loan Cost per Acre-Foot (based on aver. 400 ac-ft. delivery) $14.99 <br /> <br />Creditworthiness: The Ranch has one existing vehicle loan with Wells Fargo. The remaining <br />balance is $10,019, with an annual payment of $3,744 through 2009. The Ranch did investigate <br />funding for the project from its long-time banker, Sunflower Bank in Colby, Kansas, but found that <br />the proposed project did not meet their funding guidelines. <br /> <br />Table 2 shows the Financial Ratios and indicates overall strong ability to repay the $48,950 CWCB <br />loan, with the increased revenue from hay sales. With the smaller project scope, and the Ranch <br />operating with only the one replacement well, it is anticipated that hay production increases would <br />reduced somewhat to 5 ~ tons per acre (825 tons). At this level, projected future average Ranch <br />revenues (including cattle sales) would be $145,900, with corresponding projected future expenses <br />at $72,050. <br /> <br />Table 2. Financial Ratios <br /> <br />Financial Ratio Without With project <br /> the project Future Years <br /> (Aver. 2003-04) 2007+ <br />Operating Ratio (revenue/expense) <br />weak: less than 100% 131% 203% <br />average: 100% -120% (strong) (strong) <br />stronQ: Qreater than 120% <br />Debt Service Coverage Ratio <br />(revenues-expenses )/debt service 488% 758% <br />weak: less than 100% (strong) (strong) <br />average: 100% - 125% <br />strong: greater than 125% <br /> <br />Page 5 of 6 <br />